1. Banner Homes Group plc v Luff Developments [2000] Ch 372. Chadwick LJ traced the development of the doctrine to earlier cases like Chattock v Muller [1878] 8 Ch D 177; Pallant v Morgan [1953] Ch 43; Holiday Inns Inc v Broadhead (unreported), 19 December 1969, [1974) 232 EG 951; Time Products Ltd v Combined English Stores Group Ltd (unreported), 2 December 1974; Island Holdings Ltd v Birchington Engineering Co Ltd (unreported), 7 July 1981.

2. In many cases, the arrangements concerned a joint venture for the acquisition of land. However, the doctrine has widened in its scope of application to include acquisitions of other kinds of assets as well as going beyond joint ventures. See eg National Trust v Birden [2009] EWHC 2023 (Ch) (a joint venture pertaining to certain contractual arrangements); Benedetti v Sawiris [2009] EWHC 1330 (Ch) (the facts concerned a cooperative venture to acquire a group of companies but the claim was brought by a party who provided brokerage services for shares in the acquired companies on the basis that that was his promised remuneration). Although the claim in neither case succeeded, the court accepted in principle that the doctrine could apply in these new circumstances. In this paper, we will discuss the legal issues by reference to the core case concerning a joint venture to acquire an asset, save where a departure from the core case is necessary to discuss more intricate issues.

3. Crossco No 4 Unlimited v Jolan Limited [2011] EWCA Civ 1619; [2012] 2 All ER 754.

4. London & Regional Investments Ltd v TBI plc [2002] EWCA Civ 355; Thames Cruises Ltd v George Wheeler Launches Ltd [2003] EWHC 3093 (Ch); Kilcarne Holdings Ltd v Targetfellow (Birmingham) Ltd [2005] EWCA Civ 1355; Button v Phelps [2006] EWHC 53 (Ch); Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752; Benedetti v Sawiris, above n 3; National Trust for Places of Historic Interest v Birden [2009] EWHC 2023 (Ch); Baynes Clarke v Corless [2010] EWCA Civ 338, [2010] WTLR 751; Persimmon Homes Ltd v Great Lakes Reinsurance (UK) Plc [2010] EWHC 1705 (Comm); [2011] 1 Lloyd's Rep IR 101.

5. Thompson, Mp ‘Constructive trusts and non-binding agreements’ (2001) Conv 265 Google Scholar; Hopkins, N ‘The Pallant v Morgan “equity”?’ (2002) Conv 35 Google Scholar; Nield S ‘Constructive trusts and estoppel’ (2003) 23 Ls 311; Etherton, T ‘Constructive trusts and proprietary estoppel: the search for clarity and principle’ (2009) Conv 104 at 122–124Google Scholar; Uguccioni, J ‘Buyer beware: failed joint venture negotiations and involuntary business partnerships’ (2011) JBL 160 Google Scholar.

6. See Uguccioni, above n 6, who argues that the doctrine lacks legal certainty and conflicts with established legal principles and business practice.

7. Crossco, above n 4, at [79].

8. Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (In Administration) [2011] EWCA Civ 347; [2011] 3 WLR 1153.

9. Crossco No 4 Unlimited v Jolan Limited [2011] EWHC 803 (Ch).

10. Banner Homes, above n 2, at 396–399.

11. Crossco, above n 4, at [76].

12. Ibid, at [88].

13. Ibid, at [80].

14. Ibid, at [88].

15. Ibid, at [94]. In other words, Etherton LJ is in favour of exercising judicial restraint in commercial pre-contractual situations.

16. Ibid, at [95].

17. McFarlane, B ‘Constructive trusts on a receipt of property sub conditione’ (2004) 120 LQR 667 Google Scholar.

18. Gardner, S ‘Reliance-based constructive trusts’ in Mitchell, C (ed) Constructive and Resulting Trusts (Oxford: Hart, 2010) ch 2Google Scholar.

19. Crossco, above n 4, at [94].

20. Ibid, at [94].

21. Ibid, at [89].

22. Ibid, at [122] per McFarlane LJ; at [129]–[130] per Arden LJ.

23. Ibid, at [133].

24. Ibid, at [97]–[113] per Etherton LJ; at [123] per McFarlane LJ; at [131]–[132] per Arden LJ.

25. Stack v Dowden [2007] UKHL 17; [2007] 2 WLR 831.

26. Jones v Kernott [2011] UKSC 53; [2011] 3 WLR 1121.

27. Stack, above n 26, at [107].

28. Ibid, at [42], [60] and [69] per Baroness Hale.

29. Laskar v Laskar [2008] EWCA Civ 347; [2008] 1 WLR 2695 at [17]–[20].

30. Jones, above n 27, at [10] and [31] per Lord Walker and Lady Hale.

31. Cf Swadling, W ‘The common intention constructive trust in the House of Lords: an opportunity missed’ (2007) 123 LQR 511 Google Scholar.

32. Jones, above n 27, at [20]–[21]. While a majority of the cases concerned the division of the family home between unmarried cohabitees, the same approach applies to other types of domestic relationships, eg between a mother and a son. Adekunle v Ritchie [2007] 2 P & CR DG20.

33. Crossco, above n 4, at [87]. Cf Prior to the Supreme Court's decision in Jones, Etherton LJ commented extra-judicially that it is difficult to see how the relaxation of the requirements (detrimental reliance and inference of an agreement to share) for a common intention constructive trust in Stack could affect how the rules of constructive trust will apply in the commercial context. See Etherton, above n 6, at 124.

34. Crossco, above n 4, at [86].

35. Ibid, at [87].

36. Ibid.

37. Ibid, at [129].

38. Lord Neuberger went on to consider the case where the presumption of equal beneficial ownership was applied as a starting point and concluded that it would have been rebutted in any event. See Laskar, above n 30, at [18]–[19].

39. This is to be distinguished from a case where the non-acquiring party had extended a loan to enable the acquisition of the asset. See Kilcarne Holdings, above n 5. In a loan arrangement, the loan monies become the property of the debtor and what is between the creditor and debtor is a simple debt.

40. Prior to Stack, the domestic cases accommodated both a resulting trust analysis and a constructive analysis because the rigidity of the former analysis in quantifying a party's interest in the property does not accurately reflect the nature of familial dealings.

41. Stack, above n 26, at [70] per Baroness Hale; at [139]–[141] per Lord Neuberger. See also Yip, M ‘The rules applying to unmarried cohabitants' family home: Jones v Kernott ’ (2012) Conv 159 at 163–165Google Scholar.

42. Holiday Inns Inc v Broadhead, above n 2. Equal sharing was indeed the order made in Pallant v Morgan, above n 2; Time Products, above n 2; Island Holdings, above n 2.

43. Terms implied in law are based on public policy and may be viewed as terms that are imposed on the parties, regardless of their actual intentions. See McMeel, G The Construction of Contracts: Interpretation, Implication and Rectification (Oxford: Oxford University Press, 2nd edn, 2011) at para [10.36]Google Scholar.

44. See Collins, L (ed) Dicey and Morris on the Conflict of Laws (London: Steven & Sons, 11th edn, 1987) pp 1162–1163 Google Scholar.

45. See eg the case of Abbott v Abbott [2007] UKPC 53; [2007] 1 FLR 1451.

46. Lloyds Bank v Rosset [1991] 1 AC 107 at 133 per Lord Bridge of Harwich.

47. There are hints of importing a holistic approach at the acquisition stage in the case-law. See Stack, above n 26, at [25]–[26] per Lord Walker; at [60] per Baroness Hale; Abbott v Abbott, above n 46, at [5]–[6] per Baroness Hale.

48. Nield, above n 6, at 320.

49. Eves v Eves [1975] 1 WLR 1338.

50. Grant v Edwards [1986] Ch 638.

51. Gardner, S ‘Rethinking family property’ (1993) 109 LQR 263 at 264–265Google Scholar; Riniker, U ‘The fiction of common intention and detriment’ (1998) Conv 202 at 207Google Scholar. See also Glover N and Todd P ‘The myth of common intention’ (1996) 16 Ls 325 at 331 fn 44. Glover and Todd argued that ‘in neither case did [the man] actually intend to create a trust, these cases are good examples of [the woman] obtaining a share where there was no common intention’.

52. An objective test applies to determine whether the recipient of statements would have reasonably understood that the maker of the statements had made a commitment. See McFarlane, B and Robertson, A ‘Apocalypse averted: proprietary estoppel in the House of Lords’ (2009) 125 LQR 535 at 539–540Google Scholar.

53. Glover and Todd, above n 52, at 328–329.

54. Ibid, at 326 fn 5.

55. The agreement is not necessarily enforceable as a contract, eg, for want of certainty in terms or consideration.

56. Section 53(1)(b) of the Law of Property Act 1925 requires a declaration of trust in respect of land to be manifested and proved in writing.

57. Uguccioni, above n 6, at 163.

58. See also McGhee, J (ed) Snell's Equity (London: Sweet & Maxwell, 32nd edn, 2010) at para [24–040]Google Scholar.

59. This was noted by Patten J in Benedetti, above n 3, at [513]. Hopkins similarly points out that the parties in these cases did not intend for the land to be held on trust. The cases concerned ‘either a post-acquisition division of ownership or that the land will form part of a commercial joint venture’. See Hopkins, above n 6, at 43. These intentions, it is submitted, are intended to be effected through a contract. Exceptionally, in a case like Baynes Clarke v Corless, above n 5, at [38], the parties did not intend or expect their arrangements to be incorporated into a contract. But the arrangements were still in the nature of a bargain.

60. In Benedetti, above n 3, at [513], Pattern J has described that the claimant ‘seeks to make good the absence of a contractual entitlement to that interest by asserting an equity based on the failure of the other party to adhere to the informal bargain previously made’ (emphasis added).

61. Uguccioni, above n 6, at 165.

62. Ibid, at 165.

63. Ibid, at 164.

64. Crossco, above n 4, at [133].

65. In Cobbe, above n 5, at [14] per Lord Scott of Foscote it was stated that although cases of proprietary estoppel usually concerned rights over land, his Lordship thought that the doctrine, in principle, could also apply to chattels and choses in action. This point was not revisited in Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776 and awaits further elucidation from the Supreme Court.

66. Hopkins argues that it is only in circumstances where a detriment could not be shown that it is necessary to rely on the Pallant v Morgan equity. See Hopkins, above n 6, at 44–46.

67. See above n 3.

68. See an example discussed in Thompson, above n 6, at 276.

69. Baird Textiles Holdings Ltd v Marks & Spencer plc [2003] 1 All ER (Comm) 737.

70. A-G of Hong Kong v Reid [1994] 1 AC 324.

71. Lister & Co v Stubbs [1890] 45 Ch D 1.

72. See eg Daraydan Holdings Ltd v Solland International Ltd [2004] EWHC 622 (Ch); [2005] 4 All ER 73 and Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Ch); [2006] FSR 17.

73. Sinclair, above n 9, at [77].

74. Sinclair, above n 9, at [88]. Richards and Hughes LJJ concurred in Lord Neuberger's judgment.

75. The idea of this requirement is very similar to the requirement of a ‘proprietary base’ to justify proprietary relief as proposed by Goode and Birks, respectively. To avoid confusion with these other propositions, the expression ‘proprietary connection’ is used here to specifically denote Lord Neuberger's proposition in Sinclair. See Goode, R ‘Property and unjust enrichment’ in Burrows, A (ed), Essays on the Law of Restitution (Oxford: Oxford University Press, 1991) ch 9Google Scholar; Birks, P An Introduction to the Law of Restitution (Oxford: Clarendon Press, 1989) pp 378–385 Google Scholar; Birks, P ‘Establishing the proprietary base’ [1995] RLR 83 Google Scholar.

76. Sinclair, above n 9, at [78].

77. Sinclair, above n 9, at [79].

78. Millett, P ‘Bribes and secret commissions’ [1993] RLR 7 at 20Google Scholar.

79. Ibid, at 17.

80. Sinclair, above n 9, at [80].

81. Hayton, D ‘Proprietary liability for secret profits’ (2011) 127 LQR 487 Google Scholar; Goode, R ‘Proprietary liability for secret profits: a reply’ (2011) 127 LQR 493 Google Scholar; Virgo, G ‘Profits obtained in breach of fiduciary duty: personal or proprietary claim?’ (2011) 70 CLJ 502 CrossRefGoogle Scholar.

82. Cadogan Peotroleum plc v Tolley [2011] EWHC 2286 (Ch).

83. Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6 at [569]–[584].

84. Ibid, at [574].

85. Ibid, at [575].

86. Cadogan, above n 83, at [23]. In Sinclair, above n 9, at [80], Lord Neuberger said that there is a ‘fundamental distinction between (i) a fiduciary enriching himself by depriving a claimant of an asset and (ii) a fiduciary enriching himself by doing a wrong to the claimant’.

87. For this reason, there is a distinction between an ‘institutional constructive trust’ and a ‘remedial constructive trust’ in English law.

88. See Rotherham, C ‘Property and justice’ in Kramer, M (ed) Rights, Wrongs and Responsibilities (New York: Palgrave, 2001) pp 149–151 Google Scholar. Rothernam commented that the English private law is still influenced by the legal thought of property being the foundation of law and on this understanding of how the law should function, the court only has power to enforce property rights but no power to redistribute property.

89. Crossco, above n 4, at [88].

90. In Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd [2004] EWHC 2547 (Ch) at [232], Lewison J commented that in the ‘paradigm Pallant v Morgan case the claimant has no entitlement at law. If equity does not intervene, he is left with nothing.’

91. Cobbe, above n 5, at [33]–[36] per Lord Scott.

92. For example, Pallant v Morgan, above n 2; Holiday Inns Inc v Broadhead, above n 2; Time Products, above n 2; Island Holdings, above n 2; Banner Homes, above n 2 (an agreement in principle was in place).

93. In exceptional cases, the court may find that the parties have waived the requirement of ‘subject to contract’. See RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG (UK Production) [2010] UKSC 14; [2010] 1 WLR 753.

94. London & Regional Investments, above n 5, at [42] and [47]–[48]; Cobbe, above n 5, at [36]–[37] per Lord Scott.

95. Cobbe, above n 5, at [91] per Lord Walker.

96. Uguccioni, above n 6, at 167.

97. See Chattock v Muller, above n 2.

98. Kilcarne, above n 91, at [231] and [236] per Lewison J; Benedetti, above n 3, at [525]–[526] per Patten J. The case went on appeal before the Court of Appeal concerning the issue of quantification of remuneration under a claim for restitutionary quantum meruit. See [2010] EWCA Civ 1427.

99. This is also the observation of Pattern J in Benedetti, above n 3, at [505] and [513].

100. Conaglen, M Fiduciary Loyalty: Protecting the Due Performance of Non-Fiduciary Duties (Oxford: Hart, 2010) p 196 Google Scholar.

101. Conaglen further qualified that this will be the case, unless the courts find that the parties intended their dealings to be ‘completely legally unregulated’ as where preliminary agreements are made on a ‘subject to contract’ basis. See Conaglen, above n 101, p 196 fn 108.

102. Ibid, pp 185–187 and 195–197.

103. Davies, P ‘Anticipated contracts: more room for agreement’ (2010) 69 CLJ 467 CrossRefGoogle Scholar.

104. Hospital Products Ltd v United States Surgical Corp [1984] 156 CLR 41 at 149 per Dawson J.

105. Bristol & West Building Society v Mothew [1998] Ch 1 at 18 per Millett LJ. See also Edelman, J ‘When do fiduciary duties arise’ (2010) 126 LQR 302 Google Scholar.

106. Crossco, above n 4, at [94].

107. Etherton, above n 6, at 122–123 and fn 86. Uguccioni appears to agree with this suggested approach. See Uguccioni, above n 6, at 163.

108. Lees v Nuttall [1856] 1 Russ & M 53.

109. Heard v Pilley [1869] LR 4 Ch App 548.

110. Cave v Mackenzie [1877] 46 LJ Ch 546.

111. Chattock v Muller, above n 2.

112. See a detailed commentary on indirect representation in Watts, P and Reynolds, Fmb (eds) Bowstead and Reynolds on Agency (London: Sweet & Maxwell, 19th edn, 2010), at paras [1–020]–[1–022].Google Scholar

113. Ibid, at paras [1–005] and [1–011].

114. The formation of a contract requires offer and acceptance, intention to create legal relations, consideration, certainty of agreement, etc.

115. See an explanation on the internal and external aspects of agency in Watts and Reynolds, above n 114, at para [1–018].

116. Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1.

117. Watts and Reynolds, above n 113, at para [6–026]. But there was suggestion that a gratuitous agent must inform the principal that he is not going to perform the task undertaken in a timely manner before the principal suffers loss for not having sufficient time to appoint another agent. See ibid, at para [6–027].

118. Regarding the doctrine of estoppel by convention, see Amalgamated Investment & Property Co Ltd (In Liquidation) v Texas Commerce International Bank [1982] QB 84.

119. Ibid, at 131–132 per Brandon LJ.

120. See also a discussion of this principle in Watts and Reynolds, above n 113, at para [6–082]. It does not matter that the counterparty to the sale and purchase agreement did not know that the buyer was an agent for another party because the principle applies whether the principal is disclosed or undisclosed.

121. Bartlett v Pickersgill [1760] 1 Cox 15; James v Smith [1891] 1 Ch 384; affd (1892) 65 LT 544.

122. Rochefoucauld v Boustead [1897] 1 Ch 196. See commentary in Youdan, Tg ‘Formalities for trusts of land, and the doctrine in Rochefoucauld v Boustead ’ (1984) 43 CLJ 306 at 323 fn 87CrossRefGoogle Scholar.

123. Watts and Reynolds, above n 113, at para [6–082].

124. In commercial relationships, parties will ordinarily be taken to share the asset as tenants-in-common, unless there is contrary evidence.

125. Co-ownership in equity is required for assets (eg land, shares) which legal ownership is determined by registration and where the agent has registered the asset in question in his own name. For choses in action, it has long been accepted that there cannot be a legal tenancy in common (see Re McKerrell [1912] 2 Ch 648). For chattels, there can be both legal and equitable co-ownership. For a detailed discussion on co-ownership of different assets, seeSmith, Rj Plural Ownership (Oxford: Oxford University Press, 2005 CrossRefGoogle Scholar).

126. See above n 3.

127. For partnership, there is mutual agency.

128. Crossco, above n 4, at [88].

129. For example, see the criticisms of this label in Birks, P Unjust Enrichment (Oxford: Oxford University Press, 2nd edn, 2005) p 271 CrossRefGoogle Scholar; Burrows, A The Law of Restitution (Oxford: Oxford University Press, 3rd edn, 2011) p 28 Google Scholar; Graham, V The Principles of the Law of Restitution (Oxford: Oxford University Press, 2nd edn, 2006), pp 21 and 44Google Scholar. Cf Priel, D ‘In defence of quasi-contract’ (2012) 75 MLR 54 CrossRefGoogle Scholar.

130. See Goode, above n 76; Goode, R ‘Proprietary restitutionary claims’ in Cornish, Wr, Nolan, R, O'Sullivan, J and Virgo, G (eds) Restitution Past, Present and Future: Essays in Honour of Gareth Jones (Oxford: Hart, 1998) ch 5Google Scholar.

131. It should be noted that non-executive directors ‘may have no positive obligation to pursue a relevant opportunity for their company, but would nonetheless be precluded from pursuing it for themselves’. See Watts and Reynolds, above n 113, at para [6–081].

132. Goode ‘Proprietary restitutionary claims’, above n 131, pp 73–74. It should be noted that the case of a director taking advantage of corporate opportunities is treated as a case of agency in Watts and Reynolds, above n 113, at para [6–081].

133. Goode ‘Proprietary restitutionary claims’, above n 131, pp 73–74.

134. The full classification differentiates between: (a) cases where the claim has a proprietary base (institutional constructive trust); (b) ‘deemed agency’ gains (remedial constructive trust); and (c) cases of fiduciaries receiving bribes and secret commissions (in personam relief).

135. Only contractual agents are under an obligation to perform the task undertaken and non-performance will render him liable for consequences of breach of contract.

136. R Teele ‘The necessary reformulation of the classic fiduciary duty to avoid a conflict of interest or duties’ (1994) 22 ABLR 99 at 100. In Ultraframe, above 72, at [1355], Lewison J commented that: ‘The law relating to the accountability of a director (or former director) for profits derived from the diversion of corporate opportunities is still developing.’ Conaglen, however, does not think that there is a separate doctrine of corporate opportunity. In his view, this is part of the application of the no-conflicts rule and the no-profit rule. See Conaglen, above n 101, pp 139–141.

137. English law rejects the remedial constructive trust. See Re Polly Peck International plc (in admin) (No 2) [1998] 3 All ER 812 at 826–827 per Mummery LJ and Potter LJ concurring and at 831 per Nourse LJ; De Bruyne v De Bruyne [2010] EWCA Civ 51 at [48] per Patten LJ. Moreover, the effect of Sinclair is the entrenchment of the institutional constructive trust in English law.

138. Millett, above n 79, at 15–16; S Worthington ‘Three questions on proprietary restitutionary claims’ in Cornish etal, above n 131, p 85; Wright, D ‘The remedial constructive trust and insolvency’ in Rose, F (ed) Restitution and Insolvency (London: Mansfield Press, 2000) pp 212–216 Google Scholar.

139. Sinclair, above n 9, at [90].

140. Rotherham, above n 89, p 152; Lee, Pw ‘Inducing breach of contract, conversion and contract as property’ (2009) 29 OJLS 511 CrossRefGoogle Scholar.

141. OBG v Allan [2007] UKHL 21; [2008] 2 WLR 920 at [309].

142. See Newey J's suggestion in Cadogan, above n 83, at [29]–[30].

143. This was affirmed by Newey J, ibid, at [30].

144. Bhullar v Bhullar [2003] BCC 711 at [27]–[28]. Schiefmann and Brooke LJJ concurred in the judgment delivered by Jonathan Parker LJ.

145. Lac Minerals v International Corona Resources [1989] 61 DLR (4th) 14.

146. See a detailed discussion of the basis for awarding a constructive trust for breach of confidence in HW Tang ‘Confidence and the constructive trust’ 23 LS 135.

147. Wilson and La Forest JJ found that the parties had been in a fiduciary relationship.

148. Courts in various jurisdictions have rejected characterising confidential information as property. See Boardman v Phipps [1967] 2 AC 46 at 128 per Lord Upjohn; Moorgate Tobacco Co Ltd v Philip Morris Ltd [1984] 156 CLR 414 at 438; Cadbury Schweppes Inc v FBI Foods [1999] 167 DLR (4th) 577. See also Green, S ‘The subject matter of conversion’ [2010] JBL 218 at 234–235Google Scholar.

149. See eg Boardman, above n 149, at 107 per Lord Hodson and 115 per Lord Guest; Satnam Investments Ltd v Dunlop Heywood [1999] 3 All ER 652. Satnam was later cited with approval by Lewison J in Ultraframe, above n 73, at [1491]. See also Kohler, P and Palmer, N ‘Information as property’ in Palmer, N and McKendrick, E (eds) Interest in Goods (London: Lloyd's of London Press, 2nd edn, 1998) ch 1Google Scholar.

150. Lord Millett commented extra-judicially that artificially stretching the meaning of ‘property’ to include confidential information is ‘unnecessary as well as misleading’. See Millett, above n 79, at 14.